Pyongyang Threatens to End Venture

Amid Tensions, North Pulls Workers From Industrial Park, the Last Symbol of Cooperation With South

After a long barrage of words and gestures, Pyongyang threatens its first major action against South Korea, declaring it will withdraw its 53,000 workers from an industrial park jointly run with the South. The WSJ's Alastair Gale tells Mariko Sanchanta why this is significant to inter-Korean relations.

By

Alastair Gale

Updated April 8, 2013 11:47 p.m. ET

SEOUL—North Korea withdrew its workers from an industrial park jointly run with South Korea and said it is considering closing the complex permanently. That would leave the last remaining symbol of inter-Korean cooperation close to collapse and mark a significant exacerbation of tensions on the Korean peninsula.

The move, coming as Seoul continues to face a barrage of war threats from the North, provides a fresh challenge for new South Korean President Park Geun-hye's pledge to improve ties with Pyongyang.

ENLARGE

South Korean soldiers at a checkpoint inspect vehicles seeking to cross the border to the Kaesong complex, which North Korea threatens to shut.
Reuters

Some 53,000 North Koreans are employed at the complex but didn't arrive for work on Tuesday morning, according to South Korean companies based there. As of late Monday, 475 South Koreans and four Chinese nationals remained on the site.

President Park called North Korea's move "very disappointing," adding that few countries will invest in North Korea if the country violates international norms and promises at the Kaesong complex by suspending operations.

An official for the organization that looks after the interests of companies operating inside the Kaesong complex called on both governments to get the facility running again.

"We urge North Korea to take measures to quickly normalize the situation. We ask the South Korean government to initiate solutions to this problem through dialogue," said Han Jae-kwon, head of Kaesong Industrial Complex Companies Association.

North Korea started to put pressure on the Kaesong complex this past Wednesday, imposing a ban on the entry of workers or materials from South Korea, which has forced at least 13 of the 123 companies in Kaesong to stop operations because of a shortage of supplies.

A permanent shutdown of the Kaesong Industrial Complex would signal a major deterioration in relations. The complex, about six miles north of the border, has operated continuously since its opening in 2004 despite periodic steep downturns in ties between Seoul and Pyongyang.

North Korea is notoriously difficult to comprehend, but specialists have been able to paint a picture of the totalitarian regime — and its capital, Pyongyang — using a variety of sources and methods. WSJ's Mark Scheffler reports. Photo: Getty

Those include 2010, when 46 South Korean sailors were lost in a sinking blamed on a North Korean torpedo and when four South Koreans were killed in a North Korean artillery attack in November 2010.

Analysts cautioned that North Korea's latest action appeared to be another tactic to exert pressure on Seoul for concessions, to accompany its threats of conflict and verbal blasts over the South's joint military drills with the U.S.

On Kaesong specifically, North Korea has expressed rage at the portrayal of the complex by media in the South as a cash cow for the Pyongyang regime that it can't afford to lose.

An official North Korean statement about the pullout pointed to an additional insult: recent comments from South Korean Defense Minister Kim Kwan-jin about potentially using military force to free any hostages taken by the North at the complex.

Mr. Kim "revealed his sinister intention to introduce a special unit of the U.S. forces into the zone," said the statement, attributed to a senior official in the Workers' Party.

"How the situation will develop in the days ahead will entirely depend on the attitude of the south Korean authorities," it said. (North Korea doesn't capitalize the 's' in South Korea because it doesn't consider it to be a separate country.)

Pyongyang, the statement said, will "examine the issue of whether it will allow its [the Kaesong complex's] existence or close it." But it didn't say what conditions the South would have to meet to ensure North Korean workers return to their jobs.

South Korea's Unification Ministry, responsible for relations with North Korea, put the burden on Pyongyang.

"North Korea's unilateral decision to push ahead with this measure cannot be justified in any way and North Korea will be held responsible for all the consequences," it said. "The [South] Korean government will calmly but firmly handle North Korea's indiscreet action, and we will do our best to secure the safety of our people and the protection of our property."

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The industrial zone was created after the first inter-Korean summit meeting, which took place in 2000 between South Korean President Kim Dae-jung and North Korean dictator Kim Jong Il.

For South Korea, it has far more symbolic than economic value. Most of the companies that operate there make basic household products and have government insurance to cover disruptions caused by political factors.

But for North Korea it provides $90 million in annual wages that are paid directly to Pyongyang. The plant also is the largest employer in Kaesong, North Korea's third-biggest city, where it employs roughly one in six people.

A shutdown of the complex could have a broader impact on the South Korean economy as a signal of heightened risk of armed confrontation between the two Koreas.

South Korea's stock market fell sharply on Thursday immediately after an erroneous report that North Korea had demanded all South Korean companies leave the complex.

Tensions on the Korean peninsula have been high for weeks as North Korea pushes the idea war is imminent, a strategy analysts say is meant to win aid and security guarantees from South Korea and the U.S.

On Monday, speculation of a new nuclear-weapons test by Pyongyang was given momentum by a front-page story in a major South Korean daily saying activity at North Korea's nuclear test site in the north of the country had intensified.

South Korean officials have said that activity at the Punggye-ri site indicates preparations for another nuclear test after North Korea exploded a nuclear device there on Feb. 12.

"The North has been ready since February," said Park Soo-jin, a spokeswoman for the Unification Ministry. "It can go ahead with another nuclear test whenever it makes a policy decision to do so."

Seoul also has been bracing for a possible missile test by North Korea since the isolated state moved a medium-range missile to its east coast last week.

Corrections & Amplifications Speculation of a new nuclear-weapons test by Pyongyang was given momentum by a front-page story in a major South Korean daily on Monday. An earlier version of this article incorrectly said in one instance that the story appeared Tuesday.

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